Report for productivity policy

Expansion of UK service sectors at the expense of manufacturing has held back UK productivity, a new report shows.

The UK Innovation Report 2023, from the Institute for Manufacturing at the University of Cambridge, aims to provide data and analysis to improve UK policy-making.

Expenditure in R&D in the UK remains “well behind countries such as Germany, the US and South Korea”, said Dr Carlos Lopez-Gomez, launching the report at the Institute for Government in London.  The UK’s 2.7% of GDP compares with between 3.2 and 4.6% in the other countries.  This is despite the new methodology at the Office for National Statistics, which lifted the stated UK figure from 1.7% late last year.

The report notes that, in 2019, government spending on R&D was just 0.12% of GDP, half the OECD average of 0.24%. 

Lopez-Gomez said that the pandemic was the first recession that did not lead to a reduction in science, technology and innovation budgets around the world.

A much smaller proportion of STEM graduates go into engineering, manufacturing and construction than in leading competitors’ economies.

The report has detailed analysis of manufacturing trends by region and value added and shows a link between manufacturing decline and increasing regional disparities.  It looks in detail at the aerospace, and food and drink sectors.

Download the report HERE